Friday, July 11, 2008

Non-profits Need to Think More Like For-profits

I was at a fundraising gala recently where someone commented that, “non-profits need to think more like for-profits”. It created significant discomfort with a few people in the group who worked in the non-profit sector. Their comments centered on the premise that thinking like a for-profit meant putting their own needs (profit) ahead of the greater good and therefore thinking like a for-profit is the last thing they should do. I found myself at odds with their comments for two reasons. Firstly, the self-above-the-greater-good position they were attributing to businesses exists in many non-profits, subconsciously in some and quite consciously in others. Secondly, while it is understood that non-profits most certainly need a vision and set of goals that are different than those of a for-profit, the strategies and techniques used to reach those goals should, in many cases, be similar. There are a variety of areas where this is the case, but this posting will focus on the art of collaboration. While some non-profits like to think they are good collaborators, many hold back from the full possibilities. Quoting from Community Visions, Community Solutions by Joseph Connor and Stephanie Jadel-Taras, “While they (non-profits) may embrace the message ‘You should collaborate’ they also hear another message, ‘You are in competition with each other for a piece of a small pie'. Being told to collaborate and compete simultaneously is, to say the least, confusing for non-profit leaders.” Because participants of a collaboration carry a concern about protecting their own turf, their collaborative efforts do not lead to solutions that are greater than the sum of their parts. For-profit organizations don’t seem to have the same difficulties comprehending the value of collaboration among competitors. Businesses strive to generate a profit. If collaboration with other businesses will generate more profit, then they collaborate, even if the others around the table are their competitors. Trade associations are made of businesses that all provide similar goods or services and compete with each other, but still work together for purposes of education, advocacy, strategic planning, etc. Car dealerships form auto-malls together because in making it easier for consumers to shop at competitive dealers, more consumers go to auto-malls to shop. I have shared a conference presentation stage with competitors in a mutually advantageous effort to educate the audience on the benefits of automating some of their processes and sharing other processes with their volunteers. Yes, as a result of this, some chose to buy our software and some our competitors', but by collaborating together we were able get on the conference program to educate volunteer managers about the benefits of implementing such systems and we were all better off because of it. As non-profits strive to accomplish their particular mission, many choose to stop short of this pursuit if the result would reduce their revenue stream. How would you suppose a non-profit whose mandate was to deliver prepared meals to shut-ins would approach a community collaborative effort that in the end would reduce the number of shut-ins requiring the delivery of prepared meals, and in doing so, reduce the number of clients that they serve? What if the number of clients served has always been part of the non-profit’s grant applications as a measure of effectiveness? And to add another dimension, imagine the same scenario except that the organization’s funding is tied directly and proportionately to the client numbers. How committed to collaborating do you think this organization would be? How committed do you think it should be? As a second example to consider, what if the collaborative process led to a second agency in the community offering the same services as yours? Assume that the group as a whole has determined that in such a scenario there would be an overall increase in service delivery quantity, quality and/or cost effectiveness. How would your organization approach a collaborative effort where the community would benefit but your organization, as an organization, would somehow suffer? In my experience, collaboration seems even more difficult for a non-profit when the others around the table are a mixture of non-profits and for-profits. A general and misguided distrust in the non-profit sector of the motives of business is one of the reasons for this. Perhaps a greater obstacle to good collaboration though, is the feeling of some people in non-profit organizations that the delivery of the services that they provide could only be done appropriately by a non-profit. In some cases, this is of course true, but certainly not all. There are many types of organizations that exist in both the for-profit and non-profit arena such as festival organizers, recreation facilities/services, education and physical or mental health care. In most cases, particularly where non-profits charge a user fee, consumers of the services offered by these organizations don’t see the difference between for-profit and non-profit. They see the service delivery and how satisfied they are with it. Branching out beyond an organization’s core competencies is another obstacle to productive collaboration. Non-profits and for-profits alike struggle with finding the right balance between outsourcing and doing everything themselves. Too often the soft costs such as salaries, the longer term commitment of reinvestment, and the costs of diversion of attention from core competencies are not properly factored in when considering the use of outsourced solutions. Non-profits need to look at the big picture and weigh in all of the effects of the collaborative process and their anticipated results. In collaborating one may have to make compromises. The important consideration though, is a question of whether these are compromises to the shared goal or compromises to your organization and how it has operated in the past. I think the difficulty some organizations have separating these two is the biggest barrier to collaboration. One lesson that non-profits can learn from for-profits is that having identified the mission driven goals of the organization, one should go boldly into collaborations if they will bring about the attainment of the goal. Be as focused on that as businesses are on profit.